CBA Professional Ethics & Standards 2

Question 1

A bankruptcy administrator discovers that a trustee has been depositing estate funds into a personal account temporarily before transferring them. What is the administrator's primary ethical obligation?

Accepted Answer

Report the conduct to the appropriate supervising authority

Answer

Mishandling estate funds, even temporarily, constitutes a breach of fiduciary duty that must be reported to the supervising authority regardless of eventual correction.

Question 2

Under the ABI Model Rules, a bankruptcy professional must avoid conduct that creates the appearance of impropriety primarily because:

Accepted Answer

Public confidence in the bankruptcy system depends on perceived integrity

Answer

The appearance-of-impropriety standard protects public trust in judicial administration, which is foundational to the bankruptcy system's legitimacy.

Question 3

When a debtor's attorney also represents a creditor holding a claim against the estate, this situation is best described as a:

Accepted Answer

Conflict of interest requiring disclosure and likely disqualification

Answer

Representing both a debtor and a creditor in the same bankruptcy proceeding creates an actual conflict of interest that requires disclosure and typically disqualification.

Question 4

A Chapter 7 trustee receives an offer from a buyer who is a former business associate. The trustee must:

Accepted Answer

Disclose the relationship to the court and seek guidance before proceeding

Answer

Trustees must disclose relationships with potential buyers to the court because such connections could compromise the trustee's duty to maximize estate value impartially.

Question 5

Which standard governs the reasonableness of professional fees charged to a bankruptcy estate under 11 U.S.C. § 330?

Accepted Answer

The actual, necessary cost of services beneficial to the estate

Answer

Section 330 requires fees to reflect actual, necessary services that benefited the estate, evaluated by the court based on multiple factors including time, nature, and results.

(CBA) Certified Budget Analyst Practice Test

(CBA) Certified Budget Analyst Practice Test

CBA Professional Ethics & Standards 2